Friday, November 12, 2010

State of the Stock Market - 11/12/10 - "Definitely Worrisome"

Not a good day today on Wall Street, not by any stretch.   Yes, stocks bounced off their lows again today - that is a positive.   However, the selling we've seen continues to be heavier than any we've seen for the whole rally since September and perhaps there has been a change of character in this market.   Dip buyers from Wednesday were not treated very kindly yesterday.   Dip buyers from yesterday were not treated very kindly today.   We'll have to wait until Monday to see if today's dip buyers, I guess.   I know I have tried to put some money to work in each of the past two days and have not faired very well.   The only solace I see today is that volume does not appear to be heavier, sparing us more distribution.

Technically, barring a miracle here as I write this (3:38), the major indices are all going to close below their nine day moving average for the first time since late August.  I think that's pretty meaningful.  After today, both the 9 day and 20 day moving averages are starting to slope downward, another subtle change for this rally.   Yes, they did get a little support at the 20 day, but the 9 day has acted as such strong support for so long that I do think it is meaningful.

It's Friday, so I'll keep this short, but I expect some chop next week.   I would not short at this point but I am not dip buying either - I want to see what happens next week.  My signals are neutral, and my stops have put me back in 100% cash and I am fine with that, because for the first time in a long time, the market seems to be having some difficulty.   Tops take time so if we are topping here, there may be a lot of back and forth action over the next week or two that I want no part of at all.   Enjoy the weekend - I think we all could use the rest.

No comments: